Bhubaneswar : In a move with wider fiscal and administrative implications, the Government of Odisha has officially discontinued the deduction of professional tax from employees’ salaries with effect from April 2026, following the repeal of the two-decade-old law governing the levy.
The decision comes after the promulgation of the Odisha State Tax on Professions, Trades, Callings and Employments (Repeal) Ordinance, 2026, which nullifies the Odisha State Tax on Professions, Trades, Callings and Employments Act, 2000. The repeal has effectively ended the state’s authority to impose professional tax, a levy traditionally collected from salaried individuals and professionals by several states across India.
In a formal communication, the state government has directed all Drawing and Disbursing Officers (DDOs) under various departments to immediately stop deducting professional tax from employees’ salaries starting April 2026. The directive, issued by the Additional Secretary to all administrative departments, emphasised uniform implementation across government offices.
“I am directed to state that the Odisha State Tax on Professions, Trades, Callings and Employment Act, 2000, has been repealed with effect from April 1, 2026… Therefore, all Drawing and Disbursing Officers (DDOs) may be instructed to discontinue deduction of Tax on Profession from the salaries of employees,” the letter stated.
Professional tax is a state-level levy permitted under Article 276 of the Constitution, with a capped annual limit, and is currently imposed by several states including Maharashtra, Karnataka and West Bengal. Odisha’s decision to abolish the tax places it among a smaller group of states that have chosen to forgo this revenue stream.
Policy observers say the move could marginally increase take-home salaries for employees while simplifying payroll compliance, especially in government establishments. However, it also implies a loss of a steady, albeit relatively modest, source of state revenue.
The development, according to experts, may trigger discussions among other states on the relevance and efficiency of professional tax in the evolving fiscal landscape, particularly in the context of broader tax reforms and digitisation of payroll systems.
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